Carlsberg And Liverpool Might Part Ways

Danish brewer Carlsberg's partnership with Liverpool soccer club is the longest in the English Premier League. Now, Carlsberg, the soccer club's official sponsor since 1992, has given the latest indication that a new deal to extend the partnership might not happen.

"We will have a conclusion of a deal or not this year. But, like in every discussion, everything has a price, and we need to assess the alternatives," Carlsberg Chief Executive Jorgen Buhl Rasmussen told Forbes after the brewer released its second-quarter earnings.
Carlsberg's
current sponsorship deal with Liverpool ends by mid-2010, and the brewer held an exclusivity agreement that prevented the club from exploring other options until July this year.

"If I were a brand, I wouldn't want to be associated with a football team for so long, as you end up alienating supporters of rival teams," said Stefan Szymanski, a sports economist at the Cass Business School at City University in London. "And advertisers don't want their products to be permanently associated with just one team." Szymanski also said it could be beneficial for Liverpool as it would bring new bidders: "If a team settles with a sponsor for a long time, the sponsor is willing to pay less and less. Looking for a partner brings fresh competition that could increase the value of the space in a shirt."

"We haven't tended to see football clubs maintain a very long term relationship with a particular sponsor, and moving on would make sense," Szymanksi said. "Most of the sponsors tend to be consumer products, and there are an awful lot of consumer products with great potential to sponsor a club like Liverpool."

Shares of Carlsberg rose 5.3% in afternoon trading after the company beat forecasts for its second-quarter results thanks to aggressive cost-cutting measures. The firm also said it had gained market share in Eastern Europe and Asia.

But Carlsberg's Rasmussen remained cautious. "Our assumption is that market conditions will continue to be challenging this and next year. I don't think we will see a big improvement, though it won't get worse."